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Published on August 17, 2007

Deputy Industry Minister Piyabutr Cholvijarn yesterday met with Finance Minister Chalongphob Sussangkarn over the issue. They plan to amend an Excise Department announcement, which groups ethanol with liquor products and restricts exports.

The move also aims to ensure sugar-cane farmers get guaranteed prices.

"If ethanol has a low price, sugar cane will also have a low price," said Piyabutr, who added that the price of sugar cane was based on the price of sugar and by-product molasses.

The molasses price has dropped by 50 per cent to Bt2,000 per tonne. That will reduce the price of sugar cane for the 2007-08 harvest season to Bt650 per tonne, compared with Bt800 previously.

Currently, 45 manufacturers are licensed to produce ethanol with a combined output of one million litres per day. However, domestic demand is only 400,000 litres daily.

Low demand is related to motorists' fears that gasohol would damage their engines. The oversupply has forced some ethanol producers to suspend operations.

Meanwhile, Energy Minister Piyasvasti Amranand said yesterday that as part of plans to promote alternative energy, octane-97 petrol would be produced for luxury cars that may not be suited to gasohol.

The new and more expensive petrol will be available at some stations when octane-95 petrol demand has dropped significantly. This month, octane-95 petrol consumption has fallen to 2.5 million litres a day, while gasohol-95 demand has increased to 4.7 million litres.

In the next five to seven years, the ministry aims to promote E20 - petrol of which 20 per cent is ethanol - and E85. Discussions with the Finance Ministry are being held on excise duties.

Piyasvasti said the plan would allow oil refiners and auto-makers to prepare for changes.